Value Chain Analysis

With a new beginning of 2014, I am eager to complete the final stages of the research for “Community Arts Organizations and Sustainable Practices: A Collaborative Model.” Dr. Theresa Lant and I met with Harriet Taub, Executive Director of Materials for the Arts (MFTA), and Antonio Pontón-Núñez, the Director of Development for Friends of Materials for the Arts (FOMA), the supplemental not-for-profit donor group. From our meeting, we gathered beneficial information on the economics, logistics, and governance of the organization.

Dr. Lant and I planned for the next few steps, including a strategic analysis of the organization using a value chain analysis. She explained to me the inner workings of an industry value chain analysis, an external environment analysis concept that I have covered in my Business Strategy course in the Lubin School of Business; she then explained that the internal activities of an organization could also be analyzed using the value chain concept.

The value chain analysis depicts a series of sequential activities of an organization that refer to both the physical creation of its product or service, as well as supporting activities in developing the product or service. The primary activities – inbound logistics, operations, outbound logistics, marketing and sales, and service – could be seen in Materials for the Arts; the secondary activities – general administration, human resource management, technology development, and procurement – shows the unique relationship with the City of New York.

While observing the primary activities, I took into consideration the following questions: 1) How does the location of the warehouse and the layout increase efficiency of operations for incoming materials? 2) How efficient is the warehouse in terms of technology, cost minimization, and workflow design? 3) How effective is their outgoing materials or “check-out” process? 4) How innovative is MFTA with regard to promotions, advertising, or identifying the proper customer segments and needs? 5) What is the quality of service personnel in terms of customers’ needs?

I observed the secondary activities and asked similar questions: 1) How effective is the relationship between the City of New York and FOMA? 2) How effective is the City in finding the correct human capital for an organization like MFTA? 3) How is the collaborative relationship between the personnel and developing new technologies that could inventory materials? 4) What other special inputs (raw materials, supplies) are used by MFTA?

From these questions, I have developed a Value Chain diagram of MFTA (below). Using this model, I could utilize a better understanding of internal operations from a strategic perspective; this could help Dr. Lant and I further when exploring the next phase of our research – mounting a strategic feasibility study for the creation of a similar organization for the Pleasantville area in Westchester County, New York.

In March, Dr. Lant and I will have interviews with various Pleasantville community stakeholders. I also am in touch with Antonio Pontón-Núñez, the Director of Development for FOMA to visit MFTA to observe day-to-day operations and for data mining of the data they collect from their constituents regarding service, usefulness, and performance metrics. As I continue the research with Dr. Lant, I am excited to utilize tools and synthesize models that have been taught to me in my Business Strategy course for an analysis outside of the classroom!